You are given the following information:

required reserve ratio ............................................. 0.2

deposits(cheques) ..................................................... 400 trillion

currency in circulation ........................................ 600 trillion

excess reserves ....................................................... 400 billion

Required:

a) calculate the aggregate money supply 2 marks

b) calculate the money multiplier 4 marks

c) briefly explain the meaning of the results in (b) above. 2 marks